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INDEX

CHAPTER NO. CHAPTER-1 CONTENTS DESIGN OF THE STUDY INTRODUCTION SCOPE OF THE STUDY NEED FOR THE STUDY OBJECTIVES OF THE STUDY METHODOLOGY OF THE STUDY LIMITATIONS OF THE STUDY CHAPTER-II CHAPTER-III INDUSTRY PROFILE COMPANY PROFILE THEORETICAL FRAMEWORK 6-19 20-35 PAGE NO. 1-5

CHAPTER-IV

DATA ANALYSIS AND INTERPRETATION

36-56

CHAPTER-V

FINDINGS SUGGESTIONS CONCLUSION BIBLIOGRAPHY

57-59

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CHAPTER-I DESIGN OF THE STUDY

CHAPTER - II INDUSTRY PROFILE

CHAPTER-III THEORETICAL FRAMEWORK

CHAPTER-IV DATA ANALYSIS & INTERPRETATION

CHAPTER-V FINDINGS, SUGGESTIONS AND CONCLUSIONS

BIBLIOGRAPHY

INTRODUCTION TO THE STUDY


Indian markets have recently thrown open a new avenue for retail investors and traders to participate commodity derivatives. For those who want to diversify their portfolios beyond shares, commodities bonds and real estate are the best options. The retail investors could have done very little to actually invest in commodities such as gold and silver or oilseeds in the futures market. This was nearly impossible in commodities except for gold and silver as there was practically no retail avenue for pumping in commodities. However, with the setting up of three multi-commodity exchanges in the country, retail investors can now trade in commodity futures without having physical stock. Commodities actually offer immense potential to become a separate asset class for market survey investors, arbitrageurs and speculators. Retail investors, who claim to understand the equity markets, may find commodities an unfathomable market. But commodities are easy to understand as far as fundamentals of demand and supply are concerned. Retail investors should understand the risks and advantages of trading in commodities futures before taking a leap. Historically, pricing in commodities futures has been less volatile compared with equity and bonds, thus providing an efficient portfolio diversification option. 8

Gold An Investment Paradise Gold has been synonymous to wealth and prosperity through the ages. The history of Gold dates back to as early as 4000 BC when the prehistoric men used it as a tool. Since then Gold has filled the pages of history as the divine metal that has attracted the attention of men powerful and otherwise. Gold was the source of power for the kings. Wars were waged; lives were lost as kingdoms piled up and hoarded tonnes of Gold. In the modern history, Gold became the international currency as the Gold standard came into existence. Even after the dismantling of Gold standard, Gold existed as the backbone of international trade and economics as the US accumulated tones of yellow metal. Till today, Gold has retained its basic use as a commodity without losing its sheen as a currency. Gold, because of its ability to protect the wealth of investors can be an ideal addition to a portfolio. Also the short-term fluctuations in Gold offer good potential for trading. Gold has been on its long-term upwards trajectory which began in early 2001. This long-term move has been punctuated by short-term pullbacks offering opportunities for late entrants to join the bandwagon. With the US economy outgrowing the league of developed nations during the last two years coupled with the worsening of long-term structural weaknesses and the subsequent movements in the USD have moved the focus away from Golds use as a commodity. However the long-term fundamentals of the yellow metal have also undergone a significant change with the mining output falling quite steadily during the last decade coupled with an evergreen demand especially from Asia. This report analyses the long-term and short-term fundamental factors expected to move Gold prices. We believe that the short-term weakness expected in gold is a great opportunity for the late-comers to join the great Gold. Strategically, gold is one of the two most important commodities on the planet along with crude oil. Gold has been historically recognized as the ultimate store of value and method of payment. The following characteristics of Gold have enabled it play this role: It is durable, homogenous and divisible Golds rarity gives it intrinsic value and that value is high per unit of volume. 9

Its value is recognized across the globe and is traded in a continuous market. Gold is the only financial medium of exchange that is not someone elses liability.

SCOPE OF THE STUDY The study covers the analysis of the factors which affect the prices of gold and the investment decisions in gold. A comparative analysis of these factors has been done on the various parameters like Standard Deviation, Regression; correlation to make possible the tedious task of analysis of these factors. Further analyzing the factors will suggest the investors that whether it will be profitable for the investors to invest in gold or not. 1. The analysis is based on commodity trading specifically in gold futures market. 2. The analysis is based on opening and closing price of gold in commodity market. 3. The study is conducted based on four types of gold products i.e. Gold Gold hni Gold guinea and Gold mini only

NEED OF THE STUDY 10

The era of liberalization has revolutionized the commodity market. In such a scenario, it is necessary to make an assessment of commodity market. as more and more investors are seeking commodity market as of the important investment avenues, it is neccesary to make a detailed analysis. Such an analysis will help any person who is to invest in commodity market.

OBJECTIVES OF THE STUDY 1. To study the commodity trading and its clearing & settlement procedure. 2. To study the commodity trading with reference to gold. 3. To analyze the gold trend in commodity market. 4. To study the current investment scenario. 5. To acquaint the investor with the factors that affects the investment scenario in gold. 6. To analyze the different factors which affect the gold market and suggest the investors about the right time to invest in gold. METHODOLOGY OF THE STUDY The history and the company profile are basically searched either from the internet or by the literature review of the company. This means that it is basically based on the secondary source. Also the topic related concepts are done on the basis of the secondary sources. The data for the analysis is taken either by the consulting the companys employees or from the net. So it is partially primary and partially secondary. The analysis part is done with the help of Microsoft EXCEL by computing the required output. Finally, the conclusions and recommendations have been written on
the self finding basis.

SOURCES OF DATA 11

The data is collected from secondary sources mainly from financial websites. Primary of data: The no primarily source of data used. Secondary source of data: The secondary data is collected from Edel Weiss and Hyderabad inter connected stock exchange and various internet sources.

LIMITATIONS OF THE STUDY 1. The analysis is based on moving average tool. 2. A technical analysis is done using 3 day moving averages. 3. The present study takes in to consideration of 6 month data of gold prices. 4. This analysis will be holding good for a limited time period i.e. based on present scenario and study conducted, future movement of price may or may not be similar.

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INTRODUCTION TO THE INDIAN STOCK MARKET


The Indian broking industry is one of the oldest trading industries that have been around even before the establishment of BSE in 1875 Inception- The roots of a stock market in India began in the 1860s during the American Civil War that led to a sudden surge in the demand for cotton from India resulting in setting up of a number of joint stock companies that issued securities to raise finance. Bubble burst- The early stock market saw a boom till 1865, and then in Jul 1865, what was then used to be called the share mania ended with burst of the stock market bubble. In the aftermath of the crash, banks, on whose building steps share brokers used to gather to seek stock tips and share news, disallowed them to gather there, thus forcing them to find a place of their own, which later turned into the Dalal Street. A group of about 300 brokers formed the stock exchange in Jul 1875, which led to the formation of a trust in 1887 known as the Native Share and Stock Brokers Association. Beginning of a new phase- A new phase in the Indian stock markets began in the 1970s, with the introduction of Foreign Exchange Regulation Act (FERA) that led to divestment of foreign equity by the multinational companies, which created a surge in retail investing. Growth supporting factors-The early 1980s witnessed another surge in stock markets when major companies such as Reliance accessed equity markets for resource mobilization that evinced huge interest from retail investors. A new set of economic and financial sector reforms that began in the early 1990s gave further impetus to the growth of the stock markets in India. Setting up of SEBI- the Securities and Exchange Board of India (SEBI), which was set up in 1988 as an administrative arrangement, was given statutory powers with the enactment of the SEBI Act, 1992. The broad objectives of the SEBI include-

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o To protect the interests of the investors in securities. o To promote the development of securities markets and to regulate the securities markets. Incorporation of NSE- NSE was incorporated in Nov 1992 as a tax paying company, the first of such stock exchanges in India, since stock exchanges earlier were trusts, being run on no-profit basis. NSE was recognized as a stock exchange under the Securities Contracts (Regulations) Act 1956 in Apr 1993. It commenced operations in wholesale debt segment in Jun 1994 and capital market segment (equities) in Nov 1994. The setting up of the National Stock Exchange brought to Indian capital markets several innovations and modern practices and procedures such as nationwide trading network, electronic trading, greater transparency in price discovery and process driven operations that had significant bearing on further growth of the stock markets in India. To speed the securities settlement process, The Depositories Act 1996 was passed that allowed for dematerialization and dematerialization of securities in depositories and the transfer of securities through electronic book entry. The National Securities Depository Limited (NSDL) set up by leading financial institutions, commenced operations in Oct 1996. Despite passing through a number of changes in the post liberalization period, the industry has found its way towards sustainable growth. A stock broker is a regulated professional who buys and sells shares and other securities through market makers or agency only firms on behalf of investors. To work as a broker a certificate of registration from SEBI is mandatory after satisfying all the terms and conditions. FINANCIAL MARKETS The financial markets have been classified as Cash market (spot market) largest traded, the spot market or cash market is a commodities or securities market in which goods are sold for cash and 14

delivered immediately. Derivatives market after cash market, the derivatives markets are the financial markets for derivatives. The market can be divided into two that for exchange traded derivatives and that for over-the-counter derivatives. Debt market - The bond market (also known as the debt, credit, or fixed income market) is a financial market where participants buy and sell debt securities. Commodities market after commodities market, Commodity markets are markets where raw or primary products are exchanged. These raw commodities are traded on regulated commodities exchanges, in which they are bought and sold in standardized contracts. NEED OF A BROKER A broker is a person or firm that facilitates trades between customers. It is advisable to conduct transactions through an intermediary. For example one needs to transact through a trading member of a stock exchange if they intend to buy or sell any security on stock exchanges. One needs to maintain an account with a depository if they intend to hold securities in demat form. You need to deposit money with a banker to an issue if you are subscribing to public issues. One gets guidance if you are transacting through an intermediary. A broker acts as a go between and, in doing so, does not assume any risk for the trade. The broker does, however, charge a commission. A broking firm acts as an intermediary between NSE and Client. Stock Brokers come under the category of Market Players. The membership in the stock exchange can be granted as individual membership and corporate membership.

NSE

BROKER

CLIENT

The market intermediaries play an important role in the development of Securities Market by providing different types of services. There are two major stock-exchanges 15

NSE (composition of 50 stocks) and BSE (Composition of 30 stocks).

AN INTRODUCTION TO EDELWEISS
Edelweiss capital was started by two IIM graduates Mr. Rashesh Shah and Mr. Venkat Ramaswamy. The Company is operating in India as an Integrated Investment Banking Company. Edelweiss strives to be a thinking organization, trying to be innovative and imaginative. The policy of the company ensures transparency and greater opportunities for all its clients. SNAPSHOT Approach Client Focus, Execution orientation, Culture, Professional Integrity, Research Driven. Aim Building long term relationships with the clients and equipping the clients about the market knowledge so that they can address the day by day fast growing opportunities. Culture Entrepreneurial and result driven emphasizing confidentiality and integrity. Operations Stock broking, research services, distribution of financial products, depository services, and proprietary trading, 47 per cent of its revenue is from treasury and wholesale financing. Research (POD) 90 researchers, covers over 200 stocks across 19 sectors that accounts for about 70% of the total market capitalization.

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Offices Operates from 56 offices in 21 Indian cities, employs over 1600 employees. Major clients ESL focuses on the wholesale equity segment, providing broking services to Institutional and corporate clients and high net worth individuals. Market Capitalization- Rs 5,500 crore (Rs 55 billion), Equity Base- over Rs 2,000 crores Website- www.edelcap.com, www.edelweiss.in HIGHLIGHTS EBL has a strong equity research team, which covers approximately 50 - 60 companies within 6 industry categories, with a focus on large and medium cap stocks. The companys Equities Broking division has now expanded to include 215 stocks in 19 sectors accounting for 70 percent of market capitalization. Alternate Asset Managements total asset value currently stands at $625 million. Wholesale Financing division soared to Rs. 141 crore in FY08 from Rs. 7 crore in the previous year. Edelweiss is amongst the largest institutional broking firm, enjoying a healthy 5% plus market share in the institutional broking segment. Edelweiss is also in the process of widening its product portfolio by penetrating into product specific and sector specific niches, which will 17

broaden and strengthen its entire institutional business. Asset base of over INR 800 cr. In lending business. It is empanelled with over 40 leading FIIs, FIs, Mutual Funds, Banks and Insurance companies. Listing in various stock exchanges Bloomberg: EDEL.IN. Awarded as Best Merchant Banker by the Outlook Money NDTV Profit Awards, 2008. Ranked among the top ten players in Annual Bloomberg and Annual Thomson- Reuters. Present Chairman and CEO- Mr. Raskesh Shah. Well respected Brand with strong position in relevant market segments. NSE: EDELWEISS, BSE: 532922,

STRENGHTS OF THE COMPANY Has an integrated business model, which specializes in providing a wide range of financial products and services such as investment banking, institutional equities, wealth management, and wholesale finance. Is well positioned to leverage the growing financial sector in India and become a significant market player, especially in areas like investment banking, institutional equities etc. Has a strong research platform with research products, such as fundamental and alternative research, catering to institutions and HNWIs and retails. The fundamental research covers 190 companies which represent ~69% of the market capitalization of all the companies listed on BSE as on August, 2008. On the other hand alternative research utilizes quantitative techniques to identify short term and medium term investment opportunities in the capital market. 18

The company has a strong internal controls and risk management system employed throughout the firm to access and monitor risk across various business line. The Risk exposure is monitored and controlled through a variety of separate but complementary financial, credit and operational reporting system.

Is an established brand with strong track record of high growth and profitability?

Is strongly focused on nurturing & maintaining strong business relationships with corporate & institutional clients. Well positioned to utilize the immense opportunities in the Indian financial sector.

RECENT APPROACH Edelweiss is a premium broking firm whose targets were only HNWI clients. The company is providing the same research facility to its retail clients as it provided to its premium clients. It is offering an online platform to the clients which will increase transparency and make business hassle free for the clients. The company is making a shift from ESL (Edelweiss Securities limited) to EBL (Edelweiss Broking Limited). The benefits offered by the company to its clients are: Online Platform. News alert through Mobile messages and e-mail. Dealer support. Portfolio Doctor (Turtle). Toll Free Number (Helpline Services). Thus the company is customer focused and protects the wealth of its customers through its innovative ideas. The company is repositioning itself from a niche marketer to a mass marketer and is aiming at Brand Repositioning.

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THE PRODUCTS AND SERVICES OFFERED BY EDELWEISS ARE AS FOLLOWS Capital based. Agency based. SERVICES Recent initiatives/high growth areas. Investment Banking: This includes services such as M&A advisory, transaction execution relating to structured finance, equity markets, real estate, and infrastructure. Institutional Equities Edelweiss Institutional equities business comprises institutional equity sales, salestrading, and research. Private Client Brokerage These services are targeted at high net worth and other individuals who actively invest and trade in the equity market. Wealth Management Wealth management involves providing investment advisory, planning & asset deployment services to high net-worth individuals. Asset Management This involves both asset management as well as investment advisory services. Under this, the company advises three funds with an aggregate corpus of over USD 330 mn. Insurance Brokerage 20

Edelweiss has also entered the non-life insurance brokerage business as an IRDA registered broker in 2005 and it distributes insurance products through its subsidiary, Edelweiss Insurance Brokers Limited. Treasury The internal treasury operations manage the excess capital funds by investing the same in low risk strategies to achieve risk-adjusted returns. Wholesale financing Wholesale business provides the high net worth individual and corporate clients with facilities such as loans against shares, loans to finance IPO subscriptions, and loans against mutual fund units. This is done through a subsidiary, ECL Finance Limited. PRODUCTS Advisory Based Broking (ABB) an asset management service. Margin FundingThe Company provides funds to people who wish to invest large amount in stock market but are lacking in fund. Fund is provided against securities. The company has a policy of hair cut which means that the assets that are kept as securities, they are valued less than their original price. Fund is provided for investing in only those stocks that are listed in the stock brokers list of the company. This is to save the company from loss as company has those stocks in the list that are less volatile and whose market value is good. Structured Product As such, structured products were created to meet specific needs that cannot be met from the standardized financial instruments available in the markets. Structured products can be used as an alternative to a direct investment, as part of the asset allocation process to reduce risk exposure of a portfolio, or to utilize the current market trend.

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Mutual Fund This is a product offered by the company that takes money from the investors and invests it in the stock market on their behalf as customers are not fully aware of the stock market. They take money from many customers and collectively invest in the stock market.

Insurance Another product offered by the company in which the agent gets commission on every insurance policy done by him.

Arbitrage Arbitrage, or true arbitrage, involves buying and selling a security and taking advantage of prices differences that may exists on different markets.

While rare, this does happen from time to time Portfolio Management Services- this product comes under wealth management.

Customers are advised where they should invest their total investment savings.

Initial Public Offering (IPO) - This product invites public to participate in the bidding process.

Demat account It refers to Dematerialized Account. It is necessary to sell and buy stocks. So it is just like a bank account where actual money is replaced by shares. One has to approach the DPs, to open his demat account. So one doesnt have to possess any physical certificates showing that you own these shares. They are 22

all held electronically in the account. As one buys and sells the shares, they are adjusted in their account. Just like a bank passbook or statement, the DP provides with periodic statements of holdings and transactions.

Commodity market- In this market metals and agricultural products are traded.

Multi Commodity Exchange (MCX) for metal products and National Commodities and Derivatives Exchange (NCDEX) for agricultural products.

CLIENT REVENUE MIX Institutional/corporate client individual clients

22%

78%

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GROWTH STRATEGY

The Companys growth areas are basically across three categories- Products, asset classes and client segments. It basically focuses on HNWI clients, and now it has come into the retail segment which is its Source of growth. From the asset side it gets fixed income and is also into real estate. The popular products are wholesale financing, financial product distribution etc. INVESTMENT BANKING Investment banking business is dedicated to providing corporations, entrepreneurs and investors, the highest quality independent financial advice and transaction execution. Company professionals offer a full range of services and transaction expertise, including private placements of equity, capital raising services in public markets, convertible debt, mergers and acquisition and restructuring advisory services. Company has a track record of successfully closing more than 100 transactions to date. Company focused effort and research-driven approach enable Company professionals to be among the most knowledgeable and best in the business. Company business has been built on strong relationships, innovation, and uncompromising ethical standards.

Company aim to create significant value for entrepreneurs and mature companies by helping them execute the right capitalization strategy. Private Equity Advisory A pioneer in Private Equity advisory since its inception 11 years ago with an established leadership position in today's context. Company have been a leading Private Equity advisor for over a decade and have developed a strong expertise across industries which enable us to recognize emerging industry themes and position transactions within the context. Company strength in Private Equity advisory stems from:

Long standing relationships with marquee PE funds - Access to key decision makers at PE funds gives us an unparalleled edge in optimal structuring and efficient closure of transactions.

High quality execution - An experienced team of professionals ensures complete confidentiality, strong focus on implementation and quick turnaround time.

Focus on long term relationships - In addition to handholding the client across the entire transaction process, Company provide continued support posttransaction and have the capability to cater to investment banking needs of the client throughout his business lifecycle.

Having achieved a leadership position in the Private Equity advisory market, Company believe that Company are ideally placed to advise promoters and companies on the key considerations in a PE fund raising exercise. Structured Finance Advisory Over the years, Company have built up significant expertise in structuring appropriate financing solutions for client specific situations and identifying and placing the transaction with institutional investors. Company portfolio of solutions comprise the following-

Promoters Funding. Acquisition Financing.

Promoter Funding Promoter financing is mostly done to enable promoters to raise their stake in the company. The financing is usually against collateral of shares or other securities held by the promoter in any of the group company. The transaction helps in unlocking the value of promoter shareholding by raising additional funds. It can also be structured to refinance a loan raised against the same shares by the client earlier. Acquisition Financing There has been a significant increase in the number of acquisitions by Indian companies, both domestic as well as overseas. Acquisition financing plays a critical role in the success of inorganic growth planned by the acquirer. Based on each clients unique requirements, Company have advised on acquisition financing through appropriate stacked financing structures which comprise foreign currency senior secured debt with Resource to parent companies, rupee senior secured debt with Resource to parent companies, equity investment by the promoters, non-Resource debt, guaranteed mezzanine debt with equity upside.

HISTORY OF COMMODITY MARKETS


Commodities future trading was evolved from need of assured continuous supply of seasonal agricultural crops. The concept of organized trading in commodities evolved in Chicago, in 1848. But one can trace its roots in Japan. In Japan merchants used to store Rice in warehouses for future use. To raise cash warehouse holders sold receipts against the stored rice. These were known as rice tickets. Eventually, these rice tickets become accepted as a kind of commercial currency. Latter on rules came in to being, to standardize the trading in rice tickets. In 19 th century Chicago in United States had emerged as a major commercial hub. So that wheat producers from Midwest attracted here to sell their produce to dealers & distributors. Due to lack of organized storage facilities, absence of uniform weighing & grading mechanisms producers often confined to the mercy of dealers discretion. These situations lead to need of establishing a common meeting place for farmers and dealers to transact in spot grain to deliver wheat and receive cash in return. Gradually sellers & buyers started making commitments to exchange the produce for cash in future and thus contract for futures trading evolved. Whereby the producer would agree to sell his produce to the buyer at a future delivery date at an agreed upon price. In this way producer was aware of what price he would fetch for his produce and dealer would know about his cost involved, in advance. This kind of agreement proved beneficial to both of them. As if dealer is not interested in taking delivery of the produce, he could sell his contract to someone who needs the same. Similarly producer who not intended to deliver his produce to dealer could pass on the same responsibility to someone else. The price of such contract would dependent on the price movements in the wheat market. Latter on by making some modifications these contracts transformed in to an instrument to protect involved parties against adverse factors such as unexpected price movements and unfavorable climatic factors. This promoted traders entry in futures market, which had no intentions to buy or sell wheat but would purely speculate on price movements in market to earn profit. Trading of wheat in futures became very profitable which encouraged the entry of other commodities in futures market. This created a platform for establishment of a body to regulate and supervise these contracts. Thats why Chicago Board of Trade

(CBOT) was established in 1848. In 1870 and 1880s the New York Coffee, Cotton and Produce Exchanges were born. Agricultural commodities were mostly traded but as long as there are buyers and sellers, any commodity can be traded. In 1872, a group of Manhattan dairy merchants got together to bring chaotic condition in New York market to a system in terms of storage, pricing, and transfer of agricultural products. In 1933, during the Great Depression, the Commodity Exchange, Inc. was established in New York through the merger of four small exchanges the National Metal Exchange, the Rubber Exchange of New York, the National Raw Silk Exchange, and the New York Hide Exchange. The largest commodity exchange in USA is Chicago Board of Trade, The Chicago Mercantile Exchange, the New York Mercantile Exchange, the New York Commodity Exchange and New York Coffee, sugar and cocoa Exchange. Worldwide there are major futures trading exchanges in over twenty countries including Canada, England, India, France, Singapore, Japan, Australia and New Zealand. International Commodity Exchanges Futures trading is a result of solution to a problem related to the maintenance of a year round supply of commodities/ products that are seasonal as is the case of agricultural produce. The United States, Japan, United Kingdom, Brazil, Australia, Singapore are homes to leading commodity futures exchanges in the world. The New York Mercantile Exchange (NYMEX) The New York Mercantile Exchange is the worlds biggest exchange for trading in physical commodity futures. The exchange is in existence since last 132 years and performs trades trough two divisions, the NYMEX division, which deals in energy and platinum and the COMEX division, which trades in all the other metals. Commodities traded: - Light sweet crude oil, Natural Gas, Heating Oil, Gasoline, RBOB Gasoline, Electricity Propane, Gold, Silver, Copper, Aluminum, Platinum, Palladium, etc.

London Metal Exchange The London Metal Exchange (LME) is the worlds premier non-ferrous market, with highly liquid contracts. The exchange was formed in 1877 as a direct consequence of the industrial revolution witnessed in the 19th century. Commodities traded:- Aluminum, Copper, Nickel, Lead, Tin, Zinc, Aluminum Alloy, North American Special Aluminum Alloy (NASAAC), Polypropylene, Linear Low Density Polyethylene, etc. The Chicago Board of Trade The first commodity exchange established in the world was the Chicago Board of Trade (CBOT) during 1848 by group of Chicago merchants who were keen to establish a central market place for trade. Presently, the Chicago Board of Trade is one of the leading exchanges in the world for trading futures and options. More than 50 contracts on futures and options are being offered by CBOT currently through open outcry and/or electronically. Commodities Traded: - Corn, Soybean, Oil, Soybean meal, Wheat, Oats, Ethanol, Rough Rice, Gold, and Silver etc. Tokyo Commodity Exchange (TOCOM) The Tokyo Commodity Exchange (TOCOM) is the second largest commodity futures exchange in the world. It trades in to metals and energy contracts. It has made rapid advancement in commodity trading globally since its inception 20 years back. TOCOMs recent tie up with the MCX to explore cooperation and business opportunities is seen as one of the steps towards providing platform for futures price discovery in Asia for Asian players in Crude Oil since the demand-supply situation in U.S. that drives NYMEX is different from demand-supply situation in Asia Commodities traded: - Gasoline, Kerosene, Crude Oil, Gold, Silver, Platinum, Aluminum, Rubber, etc

Chicago Mercantile Exchange The Chicago Mercantile Exchange (CME) is the largest futures exchange in the US and the largest futures clearing house in the world for futures and options trading. Formed in 1898 primarily to trade in Agricultural commodities, the CME introduced the worlds first financial futures more than 30 years ago. Commodities Traded: - Butter milk, Diammonium phosphate, Feeder cattle, frozen pork bellies, Lean Hogs, Live cattle, Non-fat Dry Milk, Urea, Urea Ammonium Nitrate, etc. Introduction to Indian commodity market India, a commodity based economy where two-third of the one billion population depends on agricultural commodities, surprisingly has an under developed commodity market. The vast geographical extent of India and her huge population is aptly complemented by the size of her market. The broadest classification of the Indian Market can be made in terms of the commodity market and the bond market. India Commodity Market can be subdivided into the following two categories: o o Wholesale Market Retail Market

The traditional wholesale market in India dealt with whole sellers who bought goods from the farmers and manufacturers and then sold them to the retailers after making a profit in the process. It was the retailers who finally sold the goods to the consumers. With the passage of time the importance of whole sellers began to decline due to various reasons. In recent years, the extent of the retail market (both organized and unorganized) has evolved in leaps and bounds. In fact, the success stories of the commodity market of India in recent years has mainly centered on the growth generated by the Retail Sector. Almost every commodity under the sun both agricultural and industrial is now being provided at well distributed retail outlets throughout the country.

Moreover, the retail outlets belong to both the organized as well as the unorganized sector. The unorganized retail outlets of the yesteryears consist of small shop owners who are price takers where consumers face a highly competitive price structure. The organized sectors on the other hand are owned by various business houses like Pantaloons, Reliance, Tata and others. Such markets are usually selling a wide range of articles both agricultural and manufactured, edible and inedible, perishable and durable. Modern marketing strategies and other techniques of sales promotion enable such markets to draw customers from every section of the society. However the growth of such markets has still centered on the urban areas primarily due to infrastructural limitations. Considering the present growth rate, the total valuation of the Indian Retail Market is estimated to cross Rs. 10,000 billion in the year 2010. Demand for commodities is likely to become four times by 2012 than what it presently is. History of Commodity Market in India The history of organized commodity derivatives in India goes back to the nineteenth century when Cotton Trade Association started futures trading in 1875, about a decade after they started in Chicago. Over the time datives market developed in several commodities in India. Following Cotton, derivatives trading started in oilseed in Bombay (1900), raw jute and jute goods in Calcutta (1912), Wheat in Hapur (1913) and Bullion in Bombay (1920). However many feared that derivatives fuelled unnecessary speculation and were detrimental to the healthy functioning of the market for the underlying commodities, resulting in to banning of commodity options trading and cash settlement of commodities futures after independence in 1952. The parliament passed the Forward Contracts (Regulation) Act, 1952, which regulated contracts in Commodities all over the India. The act prohibited options trading in Goods along with cash settlement of forward trades, rendering a crushing blow to the commodity derivatives market. Under the act only those associations/exchanges, which are granted reorganization from the Government, are allowed to organize forward trading in regulated commodities. The act envisages three tire regulations: (i) Exchange which organizes forward trading in commodities can regulate trading on day-to-day basis. (ii) Forward

Markets Commission provides regulatory oversight under the powers delegated to it by the central Government. (iii) The Central Government- Department of Consumer Affairs, Ministry of Consumer Affairs, Food and Public Distribution- is the ultimate regulatory authority. The commodities future market remained dismantled and remained dormant for about four decades until the new millennium when the Government, in a complete change in a policy, started actively encouraging commodity market. After Liberalization and Globalization in 1990, the Government set up a committee (1993) to examine the role of futures trading. Commodity exchange in India plays an important role where the prices of any commodity are not fixed, in an organized way. Earlier only the buyer of produce and its seller in the market judged upon the prices. Others never had a say. Today, commodity exchanges are purely speculative in nature. Before discovering the price, they reach to the producers, end-users, and even the retail investors, at a grassroots level. It brings a price transparency and risk management in the vital market. Since 2002, the commodities future market in India has experienced an unexpected boom in terms of modern exchanges, number of commodities allowed for derivatives trading as well as the value of futures trading in commodities, which crossed $ 1 trillion mark in 2006. Since 1952 till 2002 commodity datives market was virtually non- existent, except some negligible activities on OTC basis. In India there are 25 recognized future exchanges, of which there are three national level multi-commodity exchanges. After a gap of almost three decades, Government of India has allowed forward transactions in commodities through Online Commodity Exchanges, a modification of traditional business known as Adhat and Vayda Vyapar to facilitate better risk coverage and delivery of commodities. The three exchanges are: National Commodity & Derivatives Exchange Limited (NCDEX) Mumbai, Multi Commodity Exchange of India Limited (MCX) Mumbai and National MultiCommodity Exchange of India Limited (NMCEIL) Ahmedabad.There are other regional commodity exchanges situated in different parts of India.

Legal framework for regulating commodity futures in India The commodity futures traded in commodity exchanges are regulated by the Government under the Forward Contracts Regulations Act, 1952 and the Rules framed there under. The regulator for the commodities trading is the Forward Markets Commission, situated at Mumbai, which comes under the Ministry of Consumer Affairs Food and Public Distribution Forward Markets Commission (FMC) It is statutory institution set up in 1953 under Forward Contracts (Regulation) Act, 1952. Commission consists of minimum two and maximum four members appointed by Central Govt. Out of these members there is one nominated chairman. All the exchanges have been set up under overall control of Forward Market Commission (FMC) of Government of India. National Commodities & Derivatives Exchange Limited (NCDEX) National Commodities & Derivatives Exchange Limited (NCDEX) promoted by ICICI Bank Limited (ICICI Bank), Life Insurance Corporation of India (LIC), National Bank of Agriculture and Rural Development (NABARD) and National Stock Exchange of India Limited (NSC). Punjab National Bank (PNB), Credit Ratting Information Service of India Limited (CRISIL), Indian Farmers Fertilizer Cooperative Limited (IFFCO), Canara Bank and Goldman Sachs by subscribing to the equity shares have joined the promoters as a share holder of exchange. NCDEX is the only Commodity Exchange in the country promoted by national level institutions. NCDEX is a public limited company incorporated on 23 April 2003. NCDEX is a national level technology driven on line Commodity Exchange with an independent Board of Directors and professionals not having any vested interest in Commodity Markets. It is committed to provide a world class commodity exchange platform for market participants to trade in a wide spectrum of commodity derivatives driven by best global practices, professionalism and transparency.

NCDEX is located in Mumbai and offers facilities to its members in more than 550 centers through out India. NCDEX currently facilitates trading of 57 commodities. Commodities Traded at NCDEX Bullion - Gold KG, Silver, Brent Minerals - Electrolytic Copper Cathode, Aluminum Ingot, Nickel Cathode, Zinc Metal Ingot, Mild steel Ingots Oil and Oil seeds - Cotton seed, Oil cake, Crude Palm Oil, Groundnut (in shell), Groundnut expeller Oil, Cotton, Mentha oil, RBD Pamolein, Refined soya oil, Rape seeds, Mustard seeds, Caster seed, Yellow soybean. Pulses - Urad, Yellow peas, Chana, Tur, Masoor, Grain - Wheat, Indian Pusa Basmati Rice, Indian parboiled Rice, Indian raw Rice (ParmalPR-106), Barley, Yellow red maize Spices - Jeera, Turmeric, Pepper Plantation - Cashew, Coffee Arabica, Coffee Robusta Fibers and other - Guar Gum, Guar seeds, Jute sacking bags, Indian 28 mm cotton, Indian 31mm cotton, Lemon, Grain Bold, Medium Staple, Mulberry, Green Cottons Potato, Raw Jute,Mulberry raw Silk, V-797 Kapas, Sugar, Chilli LCA334 Energy - Crude Oil, Furnace oil.

Multi Commodity Exchange of India Limited (MCX) Multi Commodity Exchange of India Limited (MCX) is an independent and demetalized exchange with permanent reorganization from Government of India, having Head Quarter in Mumbai. Key share holders of MCX are Financial Technologies (India) Limited, State Bank of India, Union Bank of India, Corporation Bank of India, Bank of India and Canara Bank. MCX facilitates online trading, clearing and settlement operations for commodity futures market across the country.

MCX started of trade in Nov 2003 and has built strategic alliance with Bombay Bullion Association, Bombay Metal Exchange, Solvent Extractors Association of India, pulses Importers Association and Shetkari Sanghatana. MCX deals wit about 100 commodities. Commodities Traded at MCX Bullion - Gold, Silver, Silver Coins, Minerals - Aluminum, Copper, Nickel, Iron/steel, Tin, Zinc, Lead Oil and Oil seeds - Castor oil/castor seeds, Crude Palm oil/ RBD Pamolein, Groundnut oil, Mustard/ Rapeseed oil, Soy seeds/Soy meal/Refined Soy Oil, Coconut Oil Cake, Copra, Sunflower oil, Sunflower Oil cake, Tamarind seed oil, Pulses - Chana, Masur, Tur, Urad, Yellow peas Grains - Rice/ Basmati Rice, Wheat, Maize, Bajara, Barley, Spices - Pepper, Red Chili, Jeera, Cardamom, Cinnamon, Clove, Ginger, Plantation - Cashew Kernel, Rubber, Areca nut, Betel nuts, Coconut, Coffee, Fiber and others - Kapas, Kapas Khalli, Cotton (long staple, medium staple, short staple), Cotton Cloth, Cotton Yarn, Gaur seed and Guargum, Gur and Sugar, Khandsari, Mentha Oil, Potato, Art Silk Yarn, Chara or Berseem, Raw Jute, Jute Goods, Jute Sacking, Petrochemicals - High Density Polyethylene (HDPE), Polypropylene (PP), Poly Vinyl Chloride (PVC)

Energy - Brent Crude Oil, Crude Oil, Furnace Oil, Middle East Sour Crude Oil, Natural Gas

National Multi Commodity Exchange of India Limited (NMCEIL) National Multi Commodity Exchange of India Limited (NMCEIL) is the first demutualised Electronic Multi Commodity Exchange in India. On 25 th July 2001 it was granted approval by Government to organize trading in edible oil complex. It is being supported by Central warehousing Corporation Limited, Gujarat State Agricultural Marketing Board and Neptune Overseas Limited. It got reorganization in Oct 2002. NMCEIL Head Quarter is at Ahmedabad. STRUCTURE OF COMMODITY MARKET

INTRODUCTION TO THE GOLD A very ductile and malleable, brilliant yellow precious metal that is resistant to air and water corrosion. It is a precious metal that is very soft when pure (24 Kt). Gold is the most malleable (hammerable) and ductile (able to be made into wire) metal. Gold is alloyed (mixed with other metals, usually silver and copper) to make it less expressive and harder. The purity of gold jewelry is measured in karats. Some countries hallmark gold with a three-digit number that indicates the parts per thousand of gold.

In this system. 750 means 750/1000gold (equal to 18K); 500 means 500/1000 gold (equal to 12K). Alloyed gold comes in many colors. WORLD GOLD MARKETS London as the great clearing house New York as the home of futures trading Zurich as a physical tumtable Istanbul, Dubai, Singapore and Hong Kong as doorways to important consuming regions. Tokyo where TOCOM sets the mood of Japan Mumbai under Indias liberalized gold regime.

24 HOURS ROUND THE CLOCK MARKET Hong Kong Gold Market Zurich Gold Market London Gold Market New York Market

INDIA GOLD MARKET Gold is valued in India as a savings and investment vehicle and is the second preferred investment after bank deposits India is the worlds largest consumer of gold to jewellery as investment.

In July 1997 the RBI authorized the commercial banks to import gold for sale or loan to jewelers and exporters. At present, 13 banks are active in the import of gold.

This reduced the disparity between international and domestic prices of gold from 57 percent during 1986 to 1991 to 8.5 percent in 2001.

The gold hoarding tendency is well ingrained in Indian society. Domestic consumption is dictated by monsoon/harvest and marriage season. Indian jewelry off take is sensitive to price increase and even more so to volatility.

In the cities gold is facing competition from the stock market and a wide range of consumer goods.

Facilities for refining, assaying, making them into standard bars in India, as compared to the rest of the world, are insignificant, both qualitatively and quantitatively. Major gold production countries

South Africa, United States, Australia, China, Canada, Russia, Indonesia, Peru, Uzbekistan, Papua New Guinea, China, Brazil, Chile, Philippines, Mali, Mexico, Argentina, Zimbabwe& Colombia.

Market Moving Factors Aboveground supply from sales by central bank, reclaimed scrap and official gold loans Producer/miner hedging interest

World macro-economic factors US Dollar, interest rate Comparative returns on stock markets Domestic demand based on monsoon and agricultural output, Fine gold content.

THE PURITY OF GOLD ARTICLES IS GENERALLY DESCRIBED IN THREE WAYS. Percent % (Parts of gold per 100) 100% 91.60% 75.00% 58.50% 41.60% Fineness (Parts of gold per 1000) 999 Fine 916 Fine 750 Fine 583 Fine 416 Fine

Karats (parts of gold per 24) 24 Karats 22 Karats 18 Karats 14 Karats 10 Karats

FINE GOLD CONTENT The minimum fineness is 995 parts per 1000 fine gold and gold said to be 100 fine is marked down to 999.9 fine. The following fine gold contents of other bar weights are accepted by the London Bullion Market Association (LBMA). prevailing market conditions in different locations These bars are available at the spot Loco-London price plus a premium which varies dependent on

TECHNICAL VS. FUNDAMENTAL ANALYSIS Technical analysis and fundamental analysis are the two main schools of thought in the financial market. As weve mentioned, technical analysis looks at the price movement of a security and uses this data to predict its Future price movements. Fundamental analysis, on the other hand, looks at economic factor, know as fundamentals. Lets get into the details of how this two approaches differ, the criticism against technical analysis and how technical and fundamental analysis can be used together to analyze securities. FUNDAMENTAL ANALYSIS At the most basic level, by looking at the balance sheet, cash flow statement and income statement, a fundamental analyst tries to determine a companys value. In financial terms, an analyst attempts to measure a companys intrinsic value. In this approach, investment decisions are fairly easy to make if the price of a stock trades below its intrinsic value, its a good investment. Although this is an oversimplification (fundamental analysis goes beyond just the financial statements) for the purpose of this tutorial, this simple tenet holds true. TECHNICAL ANALYSIS Technical traders, on the other hand, believe there is no reason to analyze a companys fundamental because these are all accounted for in the stocks price. Technicians believe that all the information they need about a stock can be found in its chart. While a fundamental analyst starts with the financial statements.

TYPES OF MOVING AVERAGES There are a number of different types of moving averages that vary in the way they are calculate, but how each average is interpreted remains the same. The calculations only differ in regards to the weighting that they place on the price data, shifting from equal weighting of each price point to more weight being placed on recent data .The three most common types of moving averages are

SIMPLE MOVING AVERAGE (SMA) This is the most common method used to calculate the moving average of price. It simply takes the sum of all of the past closing prices over the time period and divides the result by the number of price used in the calculation. For example, in a 10-day moving average, the last 10 closing are added together and then divided by 10. LINEAR WEIGHTED AVERAGE This moving average indicator is the least common out of the three and is used to address the problem of the equal weighting. Taking the sum of all the closing prices over a certain time period and multiplying them by the position of the data point and then dividing by the sum of the number of periods calculate the linear weighted moving average. For example ,in a five day linear weighted average ,five multiplies todays closing price ,yesterdays by four and so on until the first day in the period range is reached .These numbers are hen added together and divided by the sum of the multipliers. EXPONENTIAL MOVING AVERAGE (EMA) This moving average calculation uses a smoothing factor to place a higher weight on recent data point and is regarded as much more efficient than the linear weighted average. Having an understanding of the calculation is not generally required for most trades because most charting packages do the calculation for you. The most important thing to remember about the exponential moving average is that it is more responsive to new information relative to the simple moving average. This responsiveness is one of the key factors of why this is the moving average of choice among many technical traders. GOLD CONTRACTS In India we have 4 types of gold contracts available in mcx. Gold-1000 grams Goldmini- 100 grams

Goldhni-1000 grams Goldguinea-8 grams

Gold -1000 grams It is a 1000 grams lot available in mcx and big investor can invest in this gold lots. Gold hni-1000 grams It is a1000 grams lot available in mcx so, here who has registered as a HNI in mcx he will take the gold HNI contracts at a time .number of contracts like it called as bulk deals. Goldmini-100 grams the medium investor can invest in goldmine and the lot size is 100 grams. Goldguinea-8 grams It is especially for small investors the lot size is 8 grams.

Gold-1000 grams The below table shows 3 days moving averages Date 1-Jan-12 2-Jan-12 4-Jan-12 5-Jan-12 6-Jan-12 7-Jan-12 8-Jan-12 9-Jan-12 11-Jan-12 12-Jan-12 13-Jan-12 14-Jan-12 15-Jan-12 16-Jan-12 18-Jan-12 19-Jan-12 20-Jan-12 21-Jan-12 22-Jan-12 23-Jan-12 25-Jan-12 Close (Rs) 16747 16794 16889 16897 16923 16888 16906 16957 17092 16929 16858 16957 16899 16912 16892 16994 16756 16598 16519 16551 16518 3 DAYS MOVING AVERAGE 0 0 16810 16860 16903 16902.66667 16905.66667 16917 16985 16992.66667 16959.66667 16914.66667 16904.66667 16922.66667 16901 16932.66667 16880.66667 16782.66667 16624.33333 16556 16529.33333

27-Jan-12 28-Jan-12 29-Jan-12 30-Jan-12 1-Feb-12 2-Feb-12 3-Feb-12 4-Feb-12 5-Feb-12 6-Feb-12 8-Feb-12 9-Feb-12 10-Feb-12 11-Feb-12 12-Feb-12 13-Feb-12 15-Feb-12 16-Feb-12 17-Feb-12 18-Feb-12 19-Feb-12 20-Feb-12 22-Feb-12 23-Feb-12

16503 16353 16317 16317 16620 16754 16647 16152 16106 16286 16276 16319 16277 16474 16452 16503 16605 16731 16756 16775 16857 16816 16692 16591

16524 16458 16391 16329 16418 16563.66667 16673.66667 16517.66667 16301.66667 16181.33333 16222.66667 16293.66667 16290.66667 16356.66667 16401 16476.33333 16520 16613 16697.33333 16754 16796 16816 16788.33333 16699.66667

24-Feb-12 25-Feb-12 26-Feb-12 27-Feb-12 1-Mar-12 2-Mar-12 3-Mar-12 4-Mar-12 5-Mar-12 6-Mar-12 8-Mar-12 9-Mar-12 10-Mar-12 11-Mar-12 12-Mar-12 13-Mar-12 15-Mar-12 16-Mar-12 17-Mar-12 18-Mar-12 19-Mar-12 20-Mar-12 22-Mar-12 23-Mar-12

16488 16694 16772 16789 16796 17020 17028 16956 16901 16907 16739 16727 16484 16526 16447 16452 16538 16718 16687 16768 16509 16506 16416 16445

16590.33333 16591 16651.33333 16751.66667 16785.66667 16868.33333 16948 17001.33333 16961.66667 16921.33333 16849 16791 16650 16579 16485.66667 16475 16479 16569.33333 16647.66667 16724.33333 16654.66667 16594.33333 16477 16455.66667

24-Mar-12 25-Mar-12 26-Mar-12 27-Mar-12 29-Mar-12 30-Mar-12 31-Mar-12 1-Apr-12 3-Apr-12 5-Apr-12

16295 16261 16349 16390 16319 16291 16295 16391 16424 16377

16385.33333 16333.66667 16301.66667 16333.33333 16352.66667 16333.33333 16301.66667 16325.66667 16370 16397.33333

Sum of 3 days close 3 days moving average = 3

GOLD 3 DAYS MOVING AVERAGES The below graph shows daily prices like closing prices of the gold in the form of the technical tool indicator simple moving averages.

INTERPRETATION As above data we are taken GOLD Price moving from January 1 st to April 5th , on 1st January it is closed on 16747 in between the period on Jan 12 th it is closed to 17092 , latterly on 29th Jan it came down to 16317, on 2nd Feb. it is increased to 16754 , on 5th Feb. again it is come down to 16106 , end of the contract on 5 th April it is closed to 16377. If you see total data the gold is highly fluctuated because the gold leads the economy.

GOLDGUINEA 8 GRAMS The below table shows 3 days moving averages. 3 Date 1-Feb-12 2-Feb-12 3-Feb-12 4-Feb-12 5-Feb-12 6-Feb-12 8-Feb-12 9-Feb-12 10-Feb-12 11-Feb-12 12-Feb-12 13-Feb-12 15-Feb-12 16-Feb-12 17-Feb-12 18-Feb-12 19-Feb-12 20-Feb-12 22-Feb-12 23-Feb-12 24-Feb-12 25-Feb-12 26-Feb-12 27-Feb-12 1-Mar-12 2-Mar-12 3-Mar-12 4-Mar-12 5-Mar-12 6-Mar-12 8-Mar-12 9-Mar-12 10-Mar-12 11-Mar-12 12-Mar-12 13-Mar-12 15-Mar-12 16-Mar-12 17-Mar-12 Close(Rs) 13183 13324 13258 12896 12846 12998 12976 12991 12966 13081 13079 13118 13146 13298 13298 13296 13364 13354 13286 13212 13111 13224 13288 13294 13299 13436 13439 13404 13377 13383 13268 13251 13128 13146 13097 13091 13131 13230 13223 days moving

average 0 0 13255 13159.33333 13000 12913.33333 12940 12988.33333 12977.66667 13012.66667 13042 13092.66667 13114.33333 13187.33333 13247.33333 13297.33333 13319.33333 13338 13334.66667 13283.33333 13202.33333 13181.66667 13207.66667 13268.66667 13293.66667 13343 13391.33333 13426.33333 13406.66667 13388 13342.66667 13300.66667 13215.66667 13175 13123.66667 13111.33333 13126.33333 13150.66667 13194.66667

18-Mar-12 19-Mar-12 20-Mar-12 22-Mar-12 23-Mar-12 24-Mar-12 25-Mar-12 26-Mar-12 27-Mar-12 29-Mar-12 30-Mar-12 31-Mar-12 1-Apr-12 3-Apr-12 5-Apr-12

13260 13125 13112 13042 13056 12956 12924 12975 12986 12951 12931 12952 13005 13019 12992

13237.66667 13202.66667 13165 13092.33333 13069.33333 13018 12978.66667 12951.66667 12961.66667 12970.66667 12956 12944.66667 12962.66667 12992 13005.33333

GOLD GUINEA 3 DAYS MOVING AVERAGE The below graph shows daily prices like closing prices of the gold guinea in the form of the technical tool indicator simple moving averages.

INTERPRETATION As above data we are taken GOLD GUINEA Price moving from February 1 st to April 5th, on 1st February it is closed on 13183 in between the period on Feb. 19 th it is closed to 13364 , latterly on 26 th Feb. it came down to 13288, on 3 rd march it is increased to 13439 , on 30th march again it is come down to 12931 , end of the contract on 5th April it is closed to 12992. If you see total data the gold is highly fluctuated because the gold leads the economy.

GOLDMINI-120 GRAMS The below table shows 3 days moving averages of goldmini. 3 DAYS Date 6-Jan-12 7-Jan-12 8-Jan-12 9-Jan-12 11-Jan-12 12-Jan-12 13-Jan-12 14-Jan-12 15-Jan-12 16-Jan-12 18-Jan-12 19-Jan-12 20-Jan-12 21-Jan-12 22-Jan-12 23-Jan-12 25-Jan-12 27-Jan-12 28-Jan-12 29-Jan-12 30-Jan-12 1-Feb-12 2-Feb-12 3-Feb-12 4-Feb-12 5-Feb-12 6-Feb-12 8-Feb-12 9-Feb-12 12-Feb-12 11-Feb-12 12-Feb-12 13-Feb-12 15-Feb-12 16-Feb-12 17-Feb-12 18-Feb-12 19-Feb-12 Close(Rs) 16942 16914 16912 16980 17123 16971 16888 16973 16930 16943 16927 17024 16801 16626 16555 16571 16548 16526 16372 16329 16343 16647 16766 16659 16165 16126 16294 16279 16328 16287 16471 16450 16500 16598 16732 16757 16779 16860 MOVING AVERAGE 0 0 16922.66667 16935.33333 16998.33333 17018 16987.33333 16944 16930.33333 16948.66667 16933.33333 16964.66667 16917.33333 16817 16660.66667 16584 16558 16548.33333 16482 16409 16348 16439.66667 16585.33333 16690.66667 16530 16312 16188.33333 16226.33333 16300.33333 16298 16362 16402.66667 16473.66667 16516 16612 16695.66667 16756 16798.66667

20-Feb-12 22-Feb-12 23-Feb-12 24-Feb-12 25-Feb-12 26-Feb-12 27-Feb-12 1-Mar-12 2-Mar-12 3-Mar-12 4-Mar-12 5-Mar-12 6-Mar-12 8-Mar-12 9-Mar-12 12-Mar-12 11-Mar-12 12-Mar-12 13-Mar-12 15-Mar-12 16-Mar-12 17-Mar-12 18-Mar-12 19-Mar-12 20-Mar-12 22-Mar-12 23-Mar-12 24-Mar-12 25-Mar-12 26-Mar-12 27-Mar-12 29-Mar-12 30-Mar-12 31-Mar-12 1-Apr-12 3-Apr-12 5-Apr-12

16822 16703 16599 16494 16696 16773 16790 16799 17017 17023 16955 16905 16913 16748 16736 16499 16540 16458 16463 16541 16712 16680 16750 16502 16498 16415 16439 16295 16254 16324 16356 16261 16242 16232 16377 16427 16377

16820.33333 16795 16708 16598.66667 16596.33333 16654.33333 16753 16787.33333 16868.66667 16946.33333 16998.33333 16961 16924.33333 16855.33333 16799 16661 16591.66667 16499 16487 16487.33333 16571.33333 16643.66667 16713.33333 16644 16583.33333 16471.66667 16450.66667 16383 16329.33333 16291 16311.33333 16313.66667 16286.33333 16245 16283.66667 16345.33333 16393.66667

GOLDMINI 3 DAYS MOVING AVERAGE The below graph shows daily prices like closing prices of the goldmine in the form of the technical tool indicator simple moving averages.

INTERPRETATION As above data we are taken GOLD MINI Price moving from January 6 th to April 5th, on 6th January it is closed on 16942, in between the period on 11 th Jan it is closed to 17123 , latterly on 5th Feb. it came down to 16126, on 3rd march it is increased to 17023 , on 25th march again it is come down to 16254 , end of the contract on 5th April it is closed to 16377. If you see total data the gold is highly fluctuated because the gold leads the economy.

GOLD HNI (1200 ) 3 DAYS MOVING AVERAGES The below table shows 3 days moving averages of gold hni.

3 DAYS Date 1-Jan-12 2-Jan-12 4-Jan-12 5-Jan-12 6-Jan-12 7-Jan-12 8-Jan-12 9-Jan-12 11-Jan-12 12-Jan-12 13-Jan-12 14-Jan-12 15-Jan-12 16-Jan-12 18-Jan-12 19-Jan-12 20-Jan-12 21-Jan-12 22-Jan-12 23-Jan-12 25-Jan-12 27-Jan-12 28-Jan-12 29-Jan-12 30-Jan-12 1-Feb-12 2-Feb-12 3-Feb-12 4-Feb-12 5-Feb-12 6-Feb-12 8-Feb-12 9-Feb-12 12-Feb-12 11-Feb-12 12-Feb-12 13-Feb-12 Close(Rs) 16835 16835 16667 16667 16667 16834 16834 16834 16834 16834 16834 16834 16834 16834 16834 16834 16834 16666 16499 16499 16499 16499 16499 16334 16334 16334 16334 16497 16497 16332 16332 16332 16332 16332 16332 16332 16332 MOVING AVERAGE 0 0 16779 16723 16667 16722.66667 16778.33333 16834 16834 16834 16834 16834 16834 16834 16834 16834 16834 16778 16666.33333 16554.66667 16499 16499 16499 16444 16389 16334 16334 16388.33333 16442.66667 16442 16387 16332 16332 16332 16332 16332 16332

15-Feb-12 16-Feb-12 17-Feb-12 18-Feb-12 19-Feb-12 20-Feb-12 22-Feb-12 23-Feb-12 24-Feb-12 25-Feb-12 26-Feb-12 27-Feb-12 1-Mar-12 2-Mar-12 3-Mar-12 4-Mar-12 5-Mar-12 6-Mar-12 8-Mar-12 9-Mar-12 12-Mar-12 11-Mar-12 12-Mar-12 13-Mar-12 15-Mar-12 16-Mar-12 17-Mar-12 18-Mar-12 19-Mar-12 20-Mar-12 22-Mar-12 23-Mar-12 24-Mar-12 25-Mar-12 26-Mar-12 27-Mar-12 29-Mar-12 30-Mar-12 31-Mar-12 1-Apr-12 3-Apr-12 5-Apr-12

16332 16332 16495 16495 16495 16495 16495 16495 16495 16495 16660 16660 16660 16660 16827 16827 16827 16827 16827 16827 16827 16659 16492 16492 16327 16327 16490 16490 16490 16490 16490 16490 16325 16325 16325 16325 16162 16162 16000 16000 16000 16160

16332 16332 16386.33333 16440.66667 16495 16495 16495 16495 16495 16495 16550 16605 16660 16660 16715.66667 16771.33333 16827 16827 16827 16827 16827 16771 16659.33333 16547.66667 16437 16382 16381.33333 16435.66667 16490 16490 16490 16490 16435 16380 16325 16325 16270.66667 16216.33333 16128 16054 16000 16053.33333

GOLDHNI 3 DAYS MOVING AVERAGES The below graph shows daily prices like closing prices of the gold hni in the form of the technical tool indicator simple moving averages.

INTERPRETATION As above data we are taken GOLD HNI Price moving from January 1 st to April 5th , on 1st January it is closed on 16835 in between the period on Jan 26 th it is closed to 16666 , latterly on 6 Feb. it came down to 16332, on 12 march it is increased to 16827 , on 27th march again it is come down to 16325 , end of the contract on 5 th April it is closed to 16160. If you see total data the gold is highly fluctuated because the gold leads the economy. ANALYSIS AND INTERPRITATIONS OF THE GRAPH The above graphs shows daily prices like closing prices of the precious metal commodity (gold) in the form of the technical tour indicator simple moving avarage The moving avarage is the graph shows the moving trends of the index of gold futures for the six months period data are tekan in to consideration of defferant gold contracts. Moving avarage is used in-order to analyse the past trends of the particular commodity (gold) and helping interpretations for the analyst and investors whether to buy, hold or sell particular commodity in the near future. In this particular graphs we have taken three days moving avarages on daily basis for period of six months. Three days moving avarage is generally consider for interpreting the short term trends are intraday trading on a daily terms. In commodity market most of the investors are trading in intra-day points, they generally make both buy and sell signals in a day. The buyers and sellers mainly follow three days moving avarages. Here volumes are not taken in to concideration for analysis porpos. Even they effect the high-low in the market. This analysis is based only on each day trading closing prices.

ANALYSIS FOR GOLD In this starting contract the closing prices of three days moving averages which indicate a step increasing in the commodity future and it happens in the january as there was no fluctuation in commodity market and from the january onwards there were high incresing of gold prices. The moving average shows a incresing trend in the commodity market which shows a very bullish trend,because of high incresing trend and also the closing prices of the contract period. CONCLUSSION OF GOLD ANALYSIS In the lost six months the market was showing more of buying signals than sellings.this shows a good trend for gold in near future for long term investors and prices might rise and mostly investor are earning profit if analyse the market proporly.

FINDINGS
1.

The investment made in this is for short period of time and most of the trading is intra- day in nature i.e. buy and sell on same day to make profit. Here daily volumes and trends are consider.

2. 3. 4.

The prices of gold had shown significant raise in the six months. Dollor prices are one of the important factor, which need to track constently. Future and options derivatives contract avaliable in theworld commodity market .In india options contracts have not been permitted by the government.

5.

There is scope for better and huge profit especially in commodities market for investors. Ex: openning price of contract is Rs.11400 and closing price of contract is Rs.12650, at the end of the contract the investor can get Rs.1250 as profit.

SUGGESTIONS
1. Innvestors should try to understand the technical part of analyzing the prices of bullion commodities so tat they can earn huge profits,as fundamental analysis doesnt give sharp trends of future when compared to technical analysis. 2. The investor should always try to go for long positions right from the beginning of the contract,as it is exhibites a large scale. 3. In commodity market though there is a possibility of physical delivery of the contracts,there arise the requirement of warehouse facility that is not required in case of eqity market. 4. The farmers and traders are not fully aware of the existence of the commodity exchange in india,which has to be advertised regularly.

CONCLUSIONS
1. The dollar is weak and getting weaker due to national economic policies which dont appear to have an end. 2. Gold price appreciation makes up for lost interest, especially in a bull market. 3. Central Banks in several countries have stated their intent to increase their gold holdings instead of selling. 4. All gold funds are in a long term up trend with bullion, most recently setting new all-time highs. 5. The trend of commodity prices to increase is relative to gold price increases. 6. Worldwide Gold production is not matching consumption. The price will go up with demand. 7. Most Gold consumption is done in India &also its demand is increasing with their increase in national wealth. 8. With the recent devaluation of many international currencies, the U.S dollar was the international safe haven of last resort. We can observe the signs of this ending due to many financial factors, the most important one being a falling dollar.

BIBLIOGRAPHY
Referred Books: Fundamentals of financial derivaties Prafulla Kumar Swain Financial Derivatives S.L. Gupta Derivatives S.S.S. Kumar Futures & Options John. C. Hull

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